Private-Jet Buyers Rock Out Thanks to Used-Plane Customizer

By Edward Robinson -
Oct 9, 2013

Bloomberg Pursuits Magazine

When it comes to the trappings of wealth, few cities can outclass London. Stores in Westminster traffic in superyachts, while plutocrats construct Olympic-sized swimming pools in their Belgravia basements.

Now, thanks to Steve Varsano -- a guy from Hoboken, New Jersey, who made his money in private equity -- they can even impulse-buy a plane. Rather than hunker down in a dingy airport office complex the way most brokers do, Varsano has set up The Jet Business on Hyde Park Corner, Bloomberg Pursuits magazine will report in its Autumn 2013 issue.

There, he’s opened the world’s first retail showroom dealing in used jets, ranging in price from $10 million to $100 million. (Because new jets can take more than a year to deliver, the megawealthy often prefer pre-owned planes they can take possession of sooner.) The ground-floor space, formerly a hedge-fund headquarters, looks like an amusement-park ride for billionaires. It features a 50-foot mock-up of an Airbus ACJ319 business jet cabin, replete with club chairs, a galley and a video-simulated sky with clouds floating by.

Varsano’s staff can track all of the used private planes on the market at any given time from a pod of desks that resembles a cockpit. And when showing available planes, he employs a wall-sized bank of screens to immerse customers in the capabilities and luxe interiors of their very own sky castles. He can even flick a switch and smoke the windows so that his clientele of Arab sheiks, Chinese tycoons and Russian billionaires can’t be seen from the street.

Rock Out At 50,000 Feet

They’re also quite insistent. Many demand showers, treadmills and drop-down movie screens, while others have requested disco balls, flashing lights and state-of-the-art sound systems so they can rock out at 50,000 feet.

One of Varsano’s Middle Eastern clients even had a system developed that perpetually reorients passenger seats toward Mecca. Such comforts don’t come cheap: While the $30 million asking price for a six-year-old, 14-passenger Dassault Falcon 7X is 40 percent off a new one, it still costs beaucoup bucks to outfit the interior. The club chairs in Varsano’s simulated cabin, for example, go for $40,000 apiece because, according to international air-safety regulations, they must be able to withstand 16 Gs without breaking up.

‘Dead at 6 Gs’

“You’ll be dead at 6 Gs, but rest assured, the chair will be OK,” says the dapper Varsano, who favors Canali suits and Michel Jordi watches.

And then there’s the cost of keeping the Dassault aloft: $5,700 an hour, to be precise. American inventor Bill Lear pioneered the first private jets in the 1950s, and corporations and the superrich have purchased pre-owned planes the same way ever since: They go to brokers with established networks of mechanics, owners and pilots who informally know who’s looking to sell.

Varsano, who worked as an executive under financier Nelson Peltz in the 1990s, decided to augment the old way of quietly brokering used aircraft and go retail at the most visible spot he could find. The aeronautical impresario has taken a huge risk in leasing premium real estate in one of the priciest markets in the world, but he’s betting the fancy digs will give him an edge against rival brokers chasing the same small pool of buyers and sellers.

Byzantine Complexity

Varsano’s first step in making a sale is matching a prospective buyer with the most suitable plane. If the client needs to make monthly commutes from London to Lima, for instance, Varsano uses his screens to show him which planes on the market can fly the 5,490 nautical miles each way without stopping, how many passengers they can carry and even how their interiors are configured. Varsano also breaks down how much it’s going to cost on a per-mile basis for fuel, maintenance and the salaries for pilots and crew and then compares the figure with those of other models.

And that’s the easy part. In a marketplace as far-flung as flying, deals can quickly turn byzantine in their complexity. Varsano still marvels at the time he brokered a sale in which a Russian sold his Switzerland-based jet using a Panamanian shell company to a Chinese buyer who had the plane inspected in Germany; a team of American and British lawyers managed the transaction.

“The seller finally begged me to stop copying him on any more deal documents,” Varsano says.

Next Stop: Space

The Jet Business’s unorthodox approach appears to be catching on. Gulfstream Aerospace Corp. recently opened its own showroom in Mayfair, catering to prospective new-jet buyers from all over the world. There, buyers can select what type of Baccarat crystal and Hermes china they want to use in their eight-passenger G650s and whether to go with cherry or walnut wood for their furnishings and accents.

“London is a stopover for our clients outside the U.S., and now we don’t have to meet them anymore in hotel conference rooms,” says Tray Crow, Gulfstream’s director of interior design.

Meanwhile, Varsano is already eyeing an even loftier marketplace -- the thermosphere. As a director on the board of Virgin Galactic, the commercial-space-flight venture backed by Virgin Group founder Richard Branson, Varsano is set to blast 68 miles above the earth’s surface by the end of next year.